EU Headlines:

Same twin themes as the US, weakness and inflation:

Spain Core Inflation Rises for Fifth Month on Food
German Economic Growth Slowed as Sales Tax Increased
German Investor Confidence Dropped to 15-Year Low
French inflation at highest level since 2004

by Ben Sills
(Bloomberg) In France, the euro region’s second-biggest economy, inflation accelerated to 2.8 percent in December, the fastest pace in almost four years. Inflation held at 3.1 percent for the whole of the single currency area, matching the fastest pace since the euro was introduced.

Controlling Prices

The European Central Bank is “prepared to act preemptively so that second-round effects and risks to price stability do not materialize,” President Jean-Claude Trichet said at a press conference in Frankfurt Jan. 10.

By Christian Vits and Gabi Thesing
(Bloomberg) ECB policy makers, including President Jean-Claude Trichet and the Bundesbank’s Axel Weber, have threatened to raise interest rates if the increase in inflation leads to so-called second-round effects where workers demand higher wages to offset increased living costs.

European Bonds Gain for Second Day as German Confidence Slumps

anticipating ECB may cut due to weakness like the Fed

Prodi Government Names Antonio Lirosi as First `Inflation Czar’
Germany Says ECB’s Independence Won’t Be Questioned

They support the anti-inflation bias.

Portuguese Inflation Slowed to 2.7% in December on Transport

still high

A few highlights from Middle/Eastern Europe:

Romania Will Cut Budget Gap More to Fight Inflation

Fiscal tightening in general – slowing demand in the Eurozone.

Czech Producer Prices Unexpectedly Declined 0.1% in December

Still high and rising.


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